Competition Tribunal - Massmart Self Referral
On Tuesday, 19 September, the Competition Tribunal (‘the Tribunal’) heard an exception application made by Spar, Pick n’ Pay and Shoprite (‘the Respondents’) in the complaint referral initiated by Massmart. In this application, the Respondents sought to dismiss the referral made by Massmart on the basis that the referral contains insufficient allegations to allow the Respondents to answer them.
As you may recall, a complaint referral was initiated by Massmart against the Respondents on 9 June 2015. Massmart’s referral alleged that the Respondents had contravened sections 5(1), 8(d)(i) and / or 8(c) of the Competition Act on the basis that the invocation or threat of invocation of the exclusive agreements entered into between the Respondents and certain landlords was anti-competitive.
As Massmart’s referral did not fully comply with the Tribunal Rules, the Respondents filed exceptions and Massmart was ordered to amend its referral in accordance with the guidance given by the Tribunal. Pursuant to this order, on 15 November 2016, Massmart replaced its original referral with an amended referral in which it alleged that the Respondents had contravened section 5(1) of the Competition Act. Despite this amended referral, the Respondents filed further exception applications, which were the subject of the hearing on 19 September.
SAPOA attended the hearing by virtue of it being cited as the fourth respondent in Massmart’s complaint referral, but, as it did not raise any exceptions, played no role in the arguments before the Tribunal. During the hearing the Respondents argued, amongst other things, that:
- Massmart had failed to follow the guidance that had been given by the Tribunal, and that, as a result of their failure, they should not “be given a third bite at the cherry”;
- The landlords, who are party to the exclusive agreements alleged to be anti-competitive, should have been joined to proceedings as they have a direct and substantial interest;
- Massmart failed to indicate the amount of the market deemed to be ‘foreclosed’ by the exclusive agreements, which is paramount to a section 5(1) referral;
- Massmart failed to fully define the market in which the anti-competitive behaviour arose, and
- Massmart failed to fully describe the effects that resulted in the substantial lessening or preventing of competition that occurred as a result of these exclusive agreements.
In response, Massmart argued, amongst other things, that:
- The Respondents were giving the referral an “uncharitable reading” and that they should be able to understand the case against them;
- The exception hearing was not the correct forum to test the cogency of Massmart’s case, and that the issues raised by the Respondents could be debated at trial with witnesses and economic experts; and
- The joinder of the landlords was not necessary as Massmart was trying to restrict a practice of the Respondents.
Massmart further argued that they posed a potential competitive threat to the Respondents, and that this potential competitive threat would only be realised if Game could utilize its current footprint of stores. As such, Massmart argued that the Respondents conduct hampered this competitive threat, which, in turn, resulted in the prevention of competition under section 5 of the Competition Act.
The Tribunal, which consisted of Norman Manoim, Andiswa Ndoni and Anton Roskam, proactively engaged with Massmart and the Respondents, but adjourned proceedings before giving an order.